The Funding for Lending scheme has helped push an increase in demand for home purchase mortgages.  With the ability to borrow cheaply at interest rate levels that are historically low hopeful home buyers have taken advantage of the opportunity.  However, the number of remortgages to homeowners has remained unexpectedly low.  According to the British Bankers’ Association (BBA) remortgaging levels are at the lowest level since 1998.

January remortgaging figures revealed the lowest level for the last 15 years with only 13,696 homeowners obtaining new deals.  In comparison to when remortgaging was at a high in March 2004, the current level is at a sixth of when the market was at its highest demand.  

David Hollingworth of London & Country remarked, “There will be some people who are on very low tracker rates or on a low standard variable rate, perhaps 2% over base rate, who will think it is not worth remortgaging. There will also be people who are looking at their property and thinking the value has gone backwards, so they are not in a position to move to one of these deals for people with a lot of equity.”

BBA's statistics director, David Dooks remarked, “January's severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses.

“While general economic growth stalls, low consumer and business confidence generates a natural tendency to restrain borrowing appetite, repay borrowing where possible and to build up cash and savings as a buffer.”

Remortgages continue to be offered at low interest rates that are very attractive in comparison to levels seen in the last few years and in comparison to lender’s standard variable rates.